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Carlos, a cost estimator for Deblack Chemicals, LLC, has estimated the annual net revenue R for a newly developed antifungal spray applied to post-harvest citrus fruit. He predicts the expected revenue to be $3.1 million per year for the next 5 years. This expected amount is based on his estimate that R could be $2.6, $2.8, $3.0, $3.2, $3.4, or $3.6 million per year, all with the same proba- bility. Do the following for Carlos:
a. Identify the variable R as discrete or continuous; describe it in engineering economy terms.
b. Write the probability statements for the estimates identified.
c. Plot the probability distribution of R.
d. A sample of size 4 is developed from the distribution for R. The values in $ million are: 2.6; 3.0; 3.2; 3.0. If the interest rate is 12% per year, use the sample to calculate the PW values of R that could be included in an eco- nomic evaluation with risk considered.
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